Savannah officials are considering increasing the city’s debt to spur economic development at the stagnant Savannah River Landing site, as well as alleviate flooding concerns throughout the city.
Under the proposal, the city would issue about $10.6 million in bonds this year and $10 million in 2014 to cover the costs of improvements to President Street, which would be raised about 6 feet to alleviate flooding issues there, and other projects.
The additional bond funds would also be used to complete three drainage projects and provide $10 million owed to the Savannah-Chatham public school board.
The city would have an additional $1.7 million in annual debt payments if the bonds are approved. That obligation would be on top of $1.4 million in annual debt already being paid for 2009 bonds issued for the President Street project, which includes upgrades to General McIntosh Boulevard, Broughton Street and Randolph Street.
The additional funds are being requested after the costs of the projects exceeded expectations.
The President Street project hit some delays due to difficulties in obtaining easements and finalizing the design, since the city submitted an earlier request for proposals in 2009, said John Sawyer, Savannah public works and water resources bureau chief.
After initially allocating almost $18 million for the project at the time, the lowest bid from a second request this year came in at $29.6 million after only two proposals were submitted. Three of the five qualified contractors ended up not submitting bids.
Stoy Marlow, general manager of R.B. Baker Construction, said there was nothing wrong with the city’s requirements, but his company decided not to submit a proposal because of the complexities involved and due to some unusual risk.
The utility work was outside his company’s abilities and an extended warranty would have placed them on the hook for damages for three years, as opposed to typical one-year period, Marlow said.
The company did end up partnering with the second-ranked bidder, TIC — The Industrial Company — to perform the road work, which is one of his company’s specialties, he said. TIC submitted a $37.5 million bid for the project. McLendon Enterprises submitted the low bid.
The debt payments would initially have to be subsidized by the general fund, but city officials are counting on the expense to eventually be covered by funds raised in a special tax district that runs south from River Street to Wheaton Street and east from East Broad Street to the Truman Parkway. The revenue that comes from increased property values within the district will be designated for the payments.
Acting Assistant City Manager Dick Evans said he is confident the area is going to live up to its potential.
In addition to the Savannah River Landing site, retail development is being planned for the property across the street. A new hotel on East River Street that is within the district, and part of a larger hotel/retail complex planned by North Point Hospitality, was recently approved by the Savannah Historic District Board of Review.
The vision of a developed President Street and General McIntosh corridor led to the creation of the tax district and the subsequent issuing of the $20 million bond in 2009.
At the time, a $575 million market value was predicted for the Savannah River Landing site, which was to be an extension of the downtown Historic District featuring residential and commercial development, Evans said. The economy took a nose dive and the 40-acre site remains vacant.
Last year, the tax district generated about $400,000.
Now that things are picking up, city officials say interest in the site and surrounding areas is on the rise. Fixing the flooding problems there and providing road access will provide the impetus needed to make the developments a reality, Evans said.
There is no doubt the President Street improvements are crucial to development moving forward, said Will Burgstiner, the local liaison for the Savannah River Landing site. Tenants will not make commitments until they know when access to the site will be completed, Burgstiner said.
“It is imperative,” he said.
The three drainage projects will address flooding problems in the Habersham Village shopping center — along with Abercorn and Paulsen streets — the Baldwin Park neighborhood and downtown.
At least one business owner is not too thrilled about the $25 million Casey South drainage project digging up the street outside of Habersham Village.
Eric Karpf, who owns Punch and Judy’s children’s boutique in the shopping center, said flooding is not as bad in the area since improvements were made about 15 years ago.
The project will disrupt business and use up funds that could be better spent elsewhere, Karpf said.
“They are going to spend millions of unnecessary money, I believe,” he said. “They need to do some drainage work, but not to this extent.”
There have been some opponents to the plan, but there have also been some strong supporters, said city spokesman Bret Bell. At least one Habersham business has had to pile sand bags up to mitigate the flooding, Bell said. Many times, people want the drainage improvements, but not the disruptions that accompany them, he said.
If approved, the bonds will also help the city meet an obligation to the Savannah-Chatham school board. Instead of taking the tax district revenue, the Savannah-Chatham School Board agreed to accept a $10 million payment, which is due by the end of next year.
The Savannah City Council is expected to consider the President Street contract Thursday, with the understanding that approval would trigger the need for the bond issue.
THE PROJECTS
About the President Street/General McIntosh Boulevard road, drainage projects:
The project will raise the elevation of President Street and parts of General McIntosh Boulevard six to seven feet in order to address the tidal flooding that occurs there. The road’s intersection with General McIntosh Boulevard will also be reconfigured and new intersections with planned development on the north and south side of the street will be added.
The road improvements will run concurrently with planned drainage improvements to the Bilbo Canal, which is expected to improve drainage both in the area, as well as a wider area extending south. Construction is expected to take 30 months.
PROJECT NAME/CURRENT COST ESTIMATE
Bilbo Box Culvert Improvement (In tax district): $14,543,882
Casey South Drainage Phase II: $25,390,188
Baldwin Park Drainage Improvement: $1,820,970
Total: $41,755,040
Funding available: $37,104,119
Shortfall: $4,650,921
President Street Improvements: $28,954,662
Randolph/Broughton Street water and sewer: $1,782,147
Total: $30,736,809
Funding available: $24,766,000
Shortfall: $5,970,809
Source: City of Savannah